The consumer confidence index has
gone from a marginally positive 105.5 in August to a downbeat 86.6 in September, the biggest one month drop in fifteen years. This reflects, in part, Hurricane Katrina. Consumer confidence drives consumption which is a key part of the economy, especially at the end of the year, which is the make or break season for the retail industry.
Home sales are down 9.9% in a single month, although prices are holding steady, another bad economic turn. The much discussed housing bubble may be close to coming to roost as mortgage rates inch up.
Gasoline prices that continue to hover near $3 a gallon and natural gas prices that will be up greatly this winter also put a damper on the economic outlook.
The Fed has done nothing to cushion the blow, raising interest rates to 3.75% (another quarter of a percent) post-Katrina, in part, apparently, so that lame duck Alan Greenspan, rather than his successor next year, can take the heat for increasing interest rates.